Aircraft: B737
Phase of flight: Climb
Anomaly: Deviation - Altitude Overshoot; Deviation / Discrepancy - Procedural Clearance

Whilst operating the BOSOX Sector (ZBW Sector 47) Radar Position; I took a hand-off on Air Carrier X from Bradley Departure Control; in Windsor Locks; CT; and a hand off on Air Carrier Y; and another aircraft from ZBW Sector 19. After initial contact from Air Carrier X; and subsequent clearances; I cleared Air Carrier X to climb to an interim altitude of FL220 due to Air Carrier Y traffic at FL230. Air Carrier X's read-back was normal and confirmed receipt of clearance to climb to FL220. As Air Carrier X approached Air Carrier Y; I called traffic to Air Carrier X advising Air Carrier X of Air Carrier Y's position and altitude relative to Air Carrier X's position and assigned altitude. Air Carrier X reported Air Carrier Y in sight. Shortly thereafter; I observed Air Carrier X's MODE C readout at FL222 (200 FT above assigned altitude; which is within conformance for FL220 but unusual in today's ATC environment). As I was observing Air Carrier X's MODE C of FL222 I asked Air Carrier X to confirm that they were level at FL220; no response was forthcoming from Air Carrier X; and as I observed Air Carrier X climbing further I again asked Air Carrier X to confirm their assigned altitude as being level at FL220; again; nothing was forthcoming; shortly thereafter; Air Carrier X said that they were above FL220. Though the traffic situation between Air Carrier Y and Air Carrier X had deteriorated to less than standard separation (5 NM lateral; 1;000 FT vertical); the lateral separation and geometry was such that no risk of a mid-air collision existed (also; Air Carrier X had reported Air Carrier Y in sight before the altitude excursion). However; my concern for Air Carrier X became separation from the wake of Air Carrier Y; and separation from the subsequent following aircraft to Air Carrier Y. To try to increase the distance between Air Carrier X and Air Carrier Y wake; I turned both aircraft to the right. In my opinion; turning each aircraft to the right would result in increased separation of Air Carrier X from the wake of Air Carrier Y and was necessary. The situation became resolved when sufficient lateral separation (5 NM) had been regained; and then Air Carrier X reported that they had descended back to and were level at FL220.Unfortunately; from an ATC perspective; even though verbal confirmation on the part of Air Carrier X took place; Air Carrier X still climbed to an altitude other than that assigned by ATC; therefore; nothing can be done to preemptively avert a situation in which an aircraft climbs or descends to other than its ATC assigned altitude without a system that in real-time correlates the inputted autopilot altitude assignment (if an autopilot is being used for altitude maintenance) as being identical to that assigned by ATC and placed into the subject aircrafts ATC data-block. Allowing ATC to visually or electronically validate the autopilot altitude input could defensively identify situations such as this. First Officer was pilot flying; climbing out of BDL on the Coastal 3 departure [at] approximately 25 NM northeast of CCC VOR. Altitude assigned was FL220. Boston Center inquired if we were at our assigned altitude. We realized our actual altitude was FL226. As we were correcting back to FL220; ATC turned us 30 degrees to the right. ATC also directed an aircraft at FL230 to turn 30 degrees to there right. The other aircraft was in sight at all times. We returned expeditiously to FL220. Remainder of flight was operated normally.Local altimeter at BDL was 29.37. During the First Officer before start flow; as he set his altimeter; he did not notice that the Kollsman window was set 28.37. The altimeter needle indicated 173 FT; the field elevation at BDL. He did not realize his altimeter was indicating 1;000 FT low. As a result we were actually climbing through FL226 when his altimeter was indicating FL216. Auto pilot B was engaged and followed the indication of the First Officer altimeter; therefore there was no altitude alert as we passed the actual FL220. B737 flight crew and a Controller describe the events surrounding an altitude overshoot and loss of separation in ZBW airspace. The First Officer had incorrectly set his altimeter by 1;000 FT prior to departure and the same error was retained during the altimeter change at FL180.